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The origin of the concept has been traced back to the 12th century, but the phrase
most-favored-nation comes from the end of 17th century. The role of the MFN
provision was to link commercial traties through time and between states.
The trend towards the use of MFN coincided with the decline of mercantilism
The unconditional form of the MFN clause garanteed equal treatment without
requiring direct reciprocal concessions was used exclusevly until the end of the
18th century. Conditional MFN (equal treatment upon adequate compensation)
was inaugurated by the US in 1778.
The position of the US as a newcomer to the world commerce largely accounts for
its novel interpretation of the MFN clause (i.e. conditional MFN). With colonial
ties to the British Empire, the US has difficulties establishing an equal footing for
trade with other nations.
The divergent interpretations of the MFN principle during the late 19th century
were largely a manifestation of the economic relationship between the US
Europe. World War I altered this relationship dramatically: US no longer stood to
Europe as an underdeveloped nation. The Us policy changed reflecting its broader
and more important export interest.
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the problems are the scope & meaning of GATT Article I:1 and the exceptions to
the MFN principle
the MFN principle is a central and fundamental obligation of international trade
policy, but it is not without interpretative problems. The scope of the clauses
covrage:
o customs duties & any other import/export charges
o methods of levying the duties & charges
o rules & formalities in connection with the importation or exportation
o internal taxation and sales regulation
the definitional problems:
o what are the rules & formalities in connection with importation and
exportation? What are the import/ export charges?
o What is an advantage?
o What is a like product ?
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Idea: Spain considered that the differences in tariff classification for various types
if unroasted coffee was jusitifed by organoleptic differences resulting from
geographic factors, cultivation methods, the processing of the beans and the
genetic factor. Panel said that such differences are not sufficient to allow for a
different tariff treatment. Panel stated that unroasted coffee was mainly sold in the
mixed form (combining various types of coffee), the end-use of coffee: drinking.
In addition, no other contracting party applied different tariffs for different types
of un-roasted, non-decaffeinated coffee.
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